Looking at Tate & Lyle plc’s (LON:TATE) earnings update in March 2018, analyst forecasts seem bearish, with earnings expected to decline by -11% in the upcoming year relative to the past 5-year average growth rate of 1.5%. Presently, with latest-twelve-month earnings at UK£263m, we should see this fall to UK£234m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Tate & Lyle in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Tate & Lyle to keep growing?
The longer term view from the 11 analysts covering TATE is one of negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TATE’s earnings growth over these next few years.
By 2021, TATE’s earnings should reach UK£235m, from current levels of UK£263m, resulting in an annual growth rate of -1.4%. This leads to an EPS of £0.50 in the final year of projections relative to the current EPS of £0.57. Earnings decline appears to be a result of top-line expansion of 1.0%, which is predicted to lag cost growth leading up to 2021. Furthermore, the current 9.7% margin is expected to contract to 8.4% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Tate & Lyle, I’ve put together three pertinent aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Tate & Lyle worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Tate & Lyle is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Tate & Lyle? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.